Telecoms.com

a week in wireless

Here comes the bribe

Somebody’s got to take a stand in this dirty old world of ours and this week it was Norwegian carrier Telenor – for a period of six months, anyway. The operator this week banned Chinese supplier ZTE from all new business tenders for half a year, after the vendor breached Telenor’s code of ethics.

Quite how ZTE managed this has been kept very quiet indeed, although there were reports in the tech press that there was bribery afoot. The Informer should make it clear that these reports have been confirmed by neither vendor nor operator – they’ve offered no comment at all – and thus any bribe remains well and truly alleged in nature.

Clearly the Chinese firm did something to offend Telenor, though, and – in a written statement sent to Reuters - said the following: “This situation between Telenor and ZTE has arisen because of the actions of a single employee in a ZTE subsidiary, acting on his own behalf.” This miscreant has now been rooted out and is doubtless in line for some fairly serious punitive treatment. Maybe not bamboo whipping to the soles of the feet in a public square, but – let’s face it – he probably ain’t gonna win Employee of the Year.

ZTE has no problem with Indian carrier Aircel, however, which has just dropped a cool $400m on network expansion kit from the Chinese vendor. GSM outfit Aircel, majority-owned by Malaysian player Maxis, ranks fifth in the Indian cellular market.

Back to the shadowy deals, though. The Informer knows little of corruption in Chinese business practices, and he tries his hardest to resist the ‘no smoke without fire’ school of situational analysis. But he does have a tale of his own to tell. A few years ago he was invited to Beijing by the local representatives of a company with offices there. They were picking up the tab; flights, hotel, tasty but unidentifiable food, the whole shebang. They did, however, request that the Informer book his own flight on his company card – they were bringing in a large number of journalists from all over the world for this, and it would have been a logistical nightmare to manage the travel bookings themselves. They would, they said, reimburse the company at a later date.

It was on the final night of the trip that the Informer was approached by one of his hosts, who was carrying an armful of plain brown envelopes. He handed one of these envelopes to each of the Chinese journalists before giving the last one to yours truly. Inside the envelope was US$1,000 in crisp bills. The gentleman smiled and nodded in response to the Informer’s raised eyebrows and made a gentle pushing motion with upturned palms, a gesture which translates the world over into: “Take it, it’s yours”.

“What’s it for?” said the Informer, watching as the local hacks all bowed and buggered off with their bucks.
“It’s the money for your flight,” said the host. He may even have winked.
“I’m afraid I can’t take it,” said the Informer, tightening his jacket against the chill wind that buffets the moral high ground. “I’ll have to send you a formal company invoice when I get back to London.”

The gentleman looked extremely surprised at this response, but smiled politely nonetheless. The Informer, meanwhile, emitted a tiny but audible mewling noise as he watched the readies disappear into the inside pocket of his host’s suit jacket, never to be seen again.

Draw your own conclusions. The really galling thing was that, when the Informer got back to his office, his boss told him that he wasn’t to invoice for the flight because there was business in the offing. So the Informer’s lofty rejection of the cash (also partly – alright, completely – motivated by fear of getting found out) was pointless and costly. If there’s a moral to this story, it’s probably ‘take the money and run’, although for a moral, that’s pretty immoral.

While we’re on the subject of vaguely whiffy deals, let’s hop over to the US of A, where a national election looms and they might be about to put a mad woman into Number One Observatory Circle. The mad woman’s running mate, Senator John McCain, has been receiving customer service of the first order from the nation’s wireless operators.

McCain – heir to the oven chips empire* – has a ranch in a remote corner of Arizona where cell coverage is decidedly patchy. After several months’ worth of attempts by his wife Cindy to get a permanent cell tower built on the property to enhance coverage (not too worried about The Rays!!! over at the McCains’ place), Verizon ended up installing a portable cell-site on the McCains’ land in July. A month later, AT&T followed suit. Both sites were provided at no cost.

This all sounds a bit dodgy to the Washington Post, because McCain: “is a senior member of the Senate commerce committee, which oversees the Federal Communications Commission and the telecommunications industry. He has been a leading advocate for industry-backed legislation, fighting regulations and taxes on telecommunication services.” And because there are a number of links between his campaign team and the two operators. You can read the entire Post article here.

In other Verizon news, the carrier this week launched the latest make or break handset from Motorola. The ‘Krave’ (another Krazy name from the Mtrl mrktng mob) has not one but two touch screens, one on the outside of the clamshell and one on the inside. It’s got a virtual QWERTY keyboard with haptic feedback, an accelerometer and a two megapixel camera. It’s exclusive on Verizon for $149.99 if you sign your life away for two years. By the time the contract ends, Motorola might not even be making phones any more, so its worth could soar due to rarity value.

Meanwhile, the owner of 3G carrier 3, Hutchison Whampoa, is going to have a crack at making handsets of its own. It’s set up a subsidiary called INQ Mobile tasked with designing what it calls ‘social phones’. The INQ website is flashy and colourful and contains diddly squat in terms of actual information. But the outfit claims to be “frustrated by the limits of mobile phones” and looks concerned, primarily, with mobilising social networking tools, messaging, video sharing, shopping and VoIP. Not one for your gran, then.

It seems likely that the company will get the handsets built by an OEM, probably in Taiwan or maybe even Amoi in China, which makes the Skypephone (why doesn’t Hutch just buy Moto’s operation?), and some flavours of Linux, including Android, may well be on the menu for an operating platform.

Speaking of Android, T-Mobile UKsaid this week that it’s going to start selling the G1 handset on October 30th.

Staying in the UK, Charles Dunstone’s Carphone Warehouse revealed more details this week about its tie-up with US electronics retailer Best Buy. You might remember that a £1.1bn deal which saw CPW flog half of its European and US assets to Best Buy resulted in the creation of a new firm called Best Buy Europe. This week Dunstone revealed that BBE will launch 200 new ‘big box’ stores across the continent by 2013.

“We will focus primarily on larger stores of 30,000 square feet or more, where the overall economics are typically more attractive than for smaller stores. Our first stores will open in the UK next year,” he said.

On Tuesday Carphone reported that its mobile subscriber base climbed nine per cent year on year during the second quarter to 3.1 million, with growth driven by postpaid subscriptions, which were up 21 per cent. Mobile broadband sales contributed heavily, supported by the roll out of the company’s bundled laptop offering, and the iPhone 3G also boosted sales.

Prepay connections only climbed two per cent to 1.7 million, as the market came under pressure from weaker consumer spending.

Also pumping out the numbers this week was Nokia. Despite reporting a hefty slide in third quarter profits, the world’s biggest handset vendor avoided spooking the market with any mention of the effects of the prevailing economic crisis.

Net profit for the quarter slipped to E1.09bn from E1.56bn in the same period last year, while net sales fell five per cent to E12.2bn. The Finn shifted 117.8 million handsets, an increase of five per cent, contributing to industry mobile device volumes of 310 million units, up eight per cent year on year.

But Nokia’s mobile device ASP (average selling price) dropped E2 from the previous quarter to E72. All told, the Devices & Services division recorded net sales of E8.6bn, down seven per cent year on year. As far as Nokia’s concerned, its mobile device market share dropped to 38 per cent, down from 39 per cent last year and 40 per cent in the previous quarter.

Nevertheless, there’s some light at the end of the tunnel as Nokia said it expects industry mobile device volumes will be approximately 1.26 billion in 2008, up from an estimated 1.14 billion units in 2007.

The networks operation, Nokia Siemens Networks, also continued to struggle along, reporting net sales of E3.5bn, down five per cent year on year. Operating loss however climbed to Eur1m, compared with a reported operating loss of E120m in the third quarter of 2007.

Despite the economic turbulence, handset vendor Sony Ericsson managed to pull out the stops, turning in a smaller than expected third quarter loss this week. At E25m, the company’s quarterly loss compared to a profit of E267m in the same period last year, and follows a second quarter slide which sparked a E300m cost saving exercise. Smaller than expected the loss may be, but it’s pretty tricky to spin much positivity out of those numbers.

Third quarter sales hit Eur2.8bn, dipping slightly against last year’s E3.1bn, while handset shipments reached 25.7 million, compared to 25.9 million a year ago. Price cuts in the handset space also took their toll as Sony Ericsson’s ASP dropped from E120 in the third quarter of 2007 to E109.

Later today, Sony Ericsson is also expected to reveal further information about its cost cuts and where it intends to slim down operations. With 2,000 jobs set to be cut, it’s rumoured that 400 workers at the company’s North American headquarters in North Carolina face the axe before year end.

Right, we all know the dangers of using your mobile phone while you’re driving. Particularly if you’re texting someone. Now there’s a firm that has launched a service that automatically stops calls being made and received while you’re driving.

Canadian software house Aegis has launched DriveAssisT, which detects when phones are moving at speeds consistent with driving, and switches into secretary mode, informing callers that the person they’re trying to contact is driving and unable to answer them. This is all well and good, and trying to combat dangerous driving is certainly laudable. But Aegis is hoping to launch this in partnership with a US carrier and charge $20/month for it.

But what about if you’re on a train? Or a bus? Or a really quick horse? What if you’re a passenger in a car? Well, there’s an override function according to Aegis, which presumably can be activated by the driver as well as the passenger. Which makes it kind of pointless. Perhaps we’d be better off just pointing out that other override function to drivers; the on/off button.

Even then, it’s probably not going to get people to stop using their phone while driving. As the Informer navigates his penny farthing around the busy streets of London Town it dismays him to see just how many people still do this. Especially when they’re clearly unaware of his flimsy presence as they blithely pilot their vehicular tonnage right at him. But, as we all know, people – by and large – are stupid and selfish and don’t care too much about everyone else.

A bit like a man the Informer once saw at London’s Spitalfields Market, who was taking photographs up ladies’ skirts with his mobile phone while pretending to tie his shoelaces. The phone in question was a Sony Ericsson P900 – with the ‘P’ presumably standing for ‘pervert’. Why on earth Sony Ericsson didn’t cash in on this niche market is beyond the Informer’s understanding. You can just imagine the advert:

Anyway this indecent incident jumped back into the Informer’s consciousness when he saw a local news story this week from Pennsylvania about a man arrested for just such behaviour. The only reason it’s worth mentioning is that the guy who caught this particular felon was called Detective Gary Hammer, which is just about as perfect a name for a cop as you could think of.

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